Getting Off Stand by...

All the LEDs and other "displays" that light on when devices are in a 'standby' mode consume power, in addition to the device core itself. An article in the WSJ describes some interesting approaches towards solving this problem.

Switching Off Standby Mode Gadgets Save Energy, Cut Power to Snoozing Appliances.
It has been called "vampire power" or "phantom load," likened to the power-hungry HAL 9000 computer in Stanley Kubrick's movie, "2001: A Space Odyssey." The unblinking little red light on the television set is silently drawing energy from the grid, and studies show it can add 10% or more to a household energy bill. Now Spanish entrepreneurs claim to have invented a way to end a problem that has bedeviled energy regulators, environmentalists and appliance manufacturers. They have patented an algorithm that can detect when an appliance is in standby mode and automatically switch it off completely.

The standby-mode killer has yet to be proven commercially and must contend with other new products designed to tackle the same problem. But, despite some doubters, the Spanish inventors say theirs is the only product able to completely do away with a large, and growing, world-wide problem.

"We have a product on the table that will solve the standby problem definitively," says Jorge Juan García, a founder of Good for You, Good for the Planet, the Madrid-based company that invented the technology.

Created to help the world's couch potatoes turn the tube on and off without having to make the arduous 2-meter journey to the TV set, the standby feature has spread to virtually every appliance in the home and office. Microwave ovens, cellphone chargers, DVD players, computer monitors and printers all silently consume power when they aren't in use.

The cumulative result is huge. A study by the European Commission found that Europeans waste €7 billion ($9 billion) a year paying for appliances in standby mode, which account for about 10% of total energy use. The drain can be higher. A study by the University of California, Berkeley, found that such snoozing machines consume as much as 26% of electricity used in gadget-stuffed homes in California.

Machines on standby are responsible for about 1% of the world's greenhouse-gas emissions, according to the International Energy Agency.

Governments have tried advertising campaigns to coax their citizens into unplugging cellphone chargers and turning off their TV sets at night, to little effect. Many new devices, such as Nintendo's Wii game console, lack an off switch. Users must unplug the devices to stop them from consuming power.

Some governments are turning to regulation. California and the European Union have set limits on how much power appliances can consume in standby mode. The European Commission recently set a goal to cut this kind of consumption by at least 70% by 2020.

In Mr. García's system, a microprocessor cuts off power to the appliance automatically. When the appliance is reactivated by pressing a button, it goes back into standby mode. It doesn't have to go through its start-up sequence again.

Existing appliances can be plugged into a power strip containing Mr. García's standby-kill chip, which he provisionally calls "100% Off." Mr. García says he is talking to electronics manufacturers about incorporating it directly into their new devices.

Other companies have come up with products to address the problem. James Dunne, of ElectraTech Ltd. in the U.K., has developed a power strip he calls the Savasocket. The device "learns" the infrared signal from the TV remote and switches off the entire bank of plugs when the standby button on the remote is pressed. The Savasocket is to be introduced in the U.K. next year at a price of about £20 ($30).

"The interest in the product has been phenomenal," says Mr. Dunne, a civil engineer from the British city of Leeds. "I'm very happy with the orders that are coming in."

One Click Technologies Ltd., also based in the U.K., sells the £17 Intelliplug, which cuts power to computer peripherals such as printers, scanners and speakers when a personal computer is shut down.

But Mr. García says other products in the category either fail to cut power use completely, need a user to invest time setting them up or require human intervention to work.

Mr. García's product works for every device with a standby feature -- from microwave ovens to cellphone chargers or washing machines -- and not just TV sets with remote controls or home computers with peripherals. It controls each device individually, he says, meaning that a printer or scanner would shut down when idle, even if the PC to which it is attached is still being used.

NH Hoteles SA of Spain has been testing a prototype of Mr. García's gadget at some of the chain's 350 hotels in 22 countries. It hopes to install the device in its 50,000 rooms as part of a drive to cut energy use by 20% by 2012.

"We're very interested in this product and are seeing how we can implement it in the short or medium term," says Luis Ortega, the chain's director of environment and engineering. "That small saving, multiplied by 24 hours, 365 days a year, makes quite a big difference -- especially when you're talking about 50,000 television sets."

The Spanish subsidiary of advertising company Ogilvy & Mather Worldwide also has been testing Mr. García's standby-mode killer, and is considering combining it with software programs that turn off computers at night. "The thing works, there's no doubt about it," says Óscar Prats, chief executive of Bassat Ogilvy.

While Mr. García claims to have solved the problem of vampire power, some researchers caution that regulations will still be needed because many appliances -- such as security alarms -- need to be turned on all the time.

"Will it end the standby problem?" asks Alan Meier, a standby-power researcher at the U.S. Department of Energy's Lawrence Berkeley National Laboratory in California. "For some appliances, yes; for others, no."

Reforming Drug Addicts...Rx companies, that is.

I have written about the drug companies many times, often with the line "How much profit should one person make from another person's pain?" Having worked as a strategy consultant to the pharma firms, I am acutely aware of the actions of the drug firms to influence doctors, patients, and others while stifling competition.

Neelie Kroes, the European competition commissioner, has the guts to call it like it is.
From the NYT...
Europe Accuses Drug Makers of Padding Health Care Costs By JAMES KANTER BRUSSELS — The European Union accused drug companies on Friday of adding billions of dollars to health care costs by delaying or blocking the sale of less expensive generic medicines. One common tactic, said Neelie Kroes, the European competition commissioner, was for drug companies to amass patents to protect active ingredients in the medicines — in one case, 1,300 patents for a single drug. Another tactic, she said, was for pharmaceutical companies to sue the makers of generic drugs for ostensible patent violations, which tended to delay the availability of the lower-cost products for years. Ms. Kroes made her comments Friday while presenting the preliminary findings of a broad investigation into accusations of anticompetitive practices in the drug sector. She also turned her sights on the generics companies, which she said had received $200 million from pharmaceutical companies over seven years in exchange for holding their products off the market.

Moon-ing Jupiter- but Praising Amazon

This weekend features a spectacular show in the sky. Jupiter, Venus, and the Moon will be very close- about 2 degrees apart.

There is an interesting article titled "Amazon.com Tries User-Generated Public Relations." According to the story, "The company has announced what it calls its “Holiday Customer Review Team.” These are six Amazon customers who are particularly active in writing product reviews that it has offered to reporters to discuss gift picks. (They also contribute their recommendations on a page on Amazon’s site.)

Amazon says that members of the team are “real people giving unbiased advice to fellow consumers. They are not employed by Amazon.com, Inc. or its affiliates.”

That’s not quite the whole story.

Some team members have been flown to Seattle to conduct broadcast interviews on behalf of the company. Moreover, they have been given free products to review and keep.

The freebies are part of the Amazon Vine program the company started last year. Top reviewers get free products if they promise to write about them..."

Been a somewhat quiet and sober holiday. Crowds very significantly less than in previous years, based on my parking lot observations.

Truly Black Friday

According to NDTV, NSG reports that Taj has been cleared of terrorists, and looks like Mumbai can now rest. The death toll could easily exceed 200. Hundreds more are injured.

On the other side, a worker at Wal-Mart was trampled to death in NY this morning. The description of this event reveals savagery on the part of the public- it is astonishing that Wal-Mart does this insane Black Friday deals despite such tragedies over the past few years. It also shows the utter lack of decency among the public- a true "consumption-obsessed" culture.

Another incident, in California, resulted in 2 Men Dead After Shots Fired in SoCal Toys 'R' Us. Looks like this was a day of action.

Wall Street cheered by sending stocks up.

Time to contemplate life.

Too many people with no constructive purpose in life and too much time to "kill."

Into the second full day of the mind-numbing killing in Mumbai- I just found out that more than 125 people have been killed, including several top police and military personnel.
The special commandos are still clearing Oberoi-Trident hotel.

Suspicion is on terrorists entering Mumbai by sea, from Pakistan.

What a tragedy!

An Indian Tragedy...Mumbai attacked

Today, some really sick people attacked Mumbai, or Bombay as we oldsters call it. Nine or ten separate but coordinated attacks, death toll could easily climb into the hundreds.
Hospitals were also attacked..children and women died.

So many crimes committed in the name of religion...
Too many people with no constructive purpose in life and too much time to "kill."

My heart bleeds...

Sustainable Living, Unsustainable Political Actions

According to the NYT article "U.S. Plans $800 Billion in Lending to Ease Crisis" ---" Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system. The gargantuan efforts — one to finance loans for consumers, and a bigger one to push down home mortgage rates — were the latest but probably not the last of the federal government’s initiatives to absorb the shocks that began with losses on subprime mortgages and have spread to every corner of the economy. In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan." (emphasis mine).

Today, Jay Womack, ASLA, LEED AP, a Director of Sustainable Design at Wight & Company, a nationally recognized A/E firm based in Darien, IL., talked to my students about rain water and how we deal with it. He is a very engaging speaker, creates a compelling case, and is exciting to listen to. Sustainable living, as Jay said, is a life style issue. Amazing to see the amount of money going into the financial mess, but more money should be given to projects that promote sustainable living.

No Second Life, Except for Citi

First, I read in the NYT that "Google Unplugs Lively as Hype Fades Over Virtual Worlds." According to the article, "Google announced that its Lively experiment will shut down at the end of the year. The Web-based portal to all things virtual only started in July, making this one of Google’s shorter experiments."
I personally could not quite comprehend the value proposition of Second Life to businesses, though it could hold attraction (like anything else in the Universe) to some individuals.

On the other hand, BushObama and team dropped a lifeline to Citicorp. If Citi pulls too hard, it will take taxpayers down into a deep dark hole. Some details of this OPM addiction, i.e. a gargantuan spending of other people's money: (info from the NYT- thanks for providing the world a great newspaper)

• Citi gets $20 billion in cash immediately, in addition to the $25 billion it had already received under TARP.
• $306 billion of Citi’s toxic assets are being guaranteed, with the Treasury taking the first $5 billion of losses, the F.D.I.C. the next $10 billion and the Fed the remainder. All of this is subject to a loss-sharing agreement where 10 percent of the losses are paid by Citi. The Fed is charging an interest rate on its own loan at the rate of the Overnight Swap Index plus 300 basis points.
  
• The government is also getting $27 billion in preferred shares in Citigroup. This preferred bars the paying of dividends above 1 cent per share for three years and has a higher rate of 8 percent from the get-go (unlike the other preferred shares, which pay 5 percent for the first five years).
• Finally, the Treasury is getting $2.7 billion in warrants but pricing them on a 20-day moving average, so the strike price is $10.61 per share. (Citi on Monday was trading at more than $6 a share and closed at $3.78 on Friday).Of course the warrants are under water and it does not appear plausible that they will be worth anything anytime soon. It is like my options in my former employer, which were priced at $85 and the stock is trading at $4 or thereabouts. It would be interesting to see if the government itself would ask for repricing of warrants if they end up being worthless.

• According to the NYT, the Treasury is only taking 10 percent of the total preferred being issued in warrants, as opposed to 15 percent in prior transactions.
  

• Ipso facto, the BusHankObama group has been tough on executive compensation. "The only requirement in the term sheet is that “[a]n executive compensation plan, including bonuses, that rewards long-term performance and profitability, with appropriate limitations, must be submitted to, and approved by, the USG.” Compare this to the requirements the government put forth under its EESA rules for a systemically significant failing institution. These requirements are stricter and require a ”prohibition on the financial institution from making any golden parachute payment” to any senior executive officer. It remains to be seen how the government classifies this bailout, but it will be interesting to see if Citi and its chief executive, Vikram Pandit, are put in this mix by the government imposing these stricter limits. Citi certainly qualified under these rules as such a systemically significant failing institution. From the term sheet of the Citi deal, though, it looks as if the government will not qualify Citi as one. But the government should, if only for consistency’s sake. Citi was bailed out because it was failing, after all. Of course, the executive compensation question for poor Mr. Pandit is small beer: if anyone should have their compensation clawed back, it is Citi’s former chief, Charles Prince." (NYT)

To show solidarity with Bush, Obama appears to have dropped his commitment to restoring the pre-Bush tax rates for the wealthy. Further, he is apparently looking for a $500 B -$700B STIMULUS package- no need for Viagra. The sheer magnitude of government intervention is enough to send a free-market believer into cardiac arrest.

As my favorite comic Dave Allen used to say in Dave Allen at Large: 'May your God go with you.'

A FEDeral case of a C(ri)ITIcal situation

NYT reported today that "Plan to Rescue Citigroup Begins to Emerge." Apparently, "Under the proposal, the government would shoulder losses at Citigroup if those losses exceeded certain levels, according to people briefed on the talks, who spoke on the condition that they not be identified because the plan was still under discussion."

The WSJ has an article titled "Fed Has More Ammunition After Firing Rate-Cut Bullets" in which the writer presents some additional steps the Fed could take, in addition to reducing the short term rates to 0%. One of these would be for the Fed to buy long-term debt, including Treasuries and debt of Fannie and Freddie. This would be incestuous, if it happens.

The actions of the Fed and the Treasury are emblematic of the tail wagging the dog phenomenon. Equity and debt are not risk-free. It was the assumption, on the part of quite a few, that there was no risk associated with these "investments" that has caused the current mess. Rather than focusing on the fundamentals, i.e. education and job creation, the government is focusing on the financials. Risk-takers have to accept the downside. To the extent that regulatory failures contributed to the current mess, both the bureaucrats and the members of Congress on the appropriate committees should be held accountable.

Obama has announced a job creation program over the weekend. I have not had the time to take a look at the details. The key is the cash flow to support the investments. Apparently, Obama would not raise the tax rates for the 'wealthy' back to pre-Bush levels, but would just let them expire in 2011. This would signal that Obama is not concerned with debt levels and will add more deficits. Perhaps he will follow his guru, Ronald Reagan, in creating record deficits.

An Afternoon Tea Party might provide Answers to Common Sense Questions-

Teaparty raises an excellent question regarding my post..
While acknowledging that "there are no answers to your questions" he/she asks the question, "What should we do?"

Actions, in my model, should spring from thoughts, which should develop based on principles- ethical, moral,spiritual, economic, and others. Therefore, before we get to a discussion of possible actions, we should discuss the underlying thinking, and digging deeper, the core principles. One of the core principles should be integrity and another should be clarity in stating one's position.

If we are "free-market capitalists" then we should let the chips fall where they may. In the short-term there will be major job losses and dislocations but new markets will spring up- that's the thinking. The Big Three might go bankrupt, might restructure, and perhaps one of them might emerge in a strong position to invest for future products. The labor force will be impacted, but that is no different from the impact of other dislocations- the disappearance of typists when word processing software took over, or the disappearance of pay phones and long distance operators, for example.

One of my core principles is seeing that everyone has basic living means and access to health care. Another is to leave, in aggregate, within one's means. A third is to support, to the maximum extent possible, others who are less fortunate, irrespective of cause. So, asking the wealthy to pay more to support the creation of new industries, with no expectation of "personal financial returns" is reasonable.
I recommend that readers watch an interview with Mohammed Yunus-
http://www.pbs.org/newshour/bb/business/july-dec06/yunus_11-22.html

Private Label & President's Choice..

An interesting article in the Tribune on the increasing popularity of store brands (a.k.a. private labels). The article cites Dominicks chain of stores, which offers the Safeway private label brand.
Jewel-Osco, part of the SUPERVALU chain, markets its store brand, President's Choice. These are becoming more popular with customers.

Talking about Presidents and choices, the NYT has a good piece titled "Presidents of Colleges Give Back Some Pay" in which Tamar Lewin writes "In the week since The Chronicle of Higher Education published its annual survey of university presidents’ pay — a week in which the nation’s economic troubles worsened — several of the highest-paid presidents said that they would give back part of their pay or forgo their raises. Pat Callan, president of the National Center for Public Policy and Higher Education, said he had never heard of such a wave of givebacks. “When you see a cluster like this,” he said, “it seems like sort of belated recognition that this presidential pay thing has gotten out of hand. People are getting tuition increases, some faculty are facing layoffs, it just doesn’t look too good for presidents, no matter how capable they are, to be getting so much money. Americans have had a touching faith in higher education; it’s losing its good image with the public.”"

Obama's choices

On our bus drive to Minnesota this evening I contemplated the cabinet choices of Obama. Hillary, Daschle, Geithner, etc.
I hope Obama gets some fresh people in. They are sorely needed.

***
Citi has really been knocked down. It is amazing.

Lives in the Balance...

Lives in the Balance....A powerful, moving album by Jackson Browne. This album (released in 1986) along with 10,000 Maniacs' In My Tribe and Los Lobos' In the Light of the Moon has had a profound influence on my life's journey. Social justice before it was called social justice.

***Last night I attended a fund-raising dinner gala for Elmhurst Memorial Hospital and had the pleasure of listening to Mr. Andrew McKenna, development committee co-chairman for the Chicago 2016 Olympic Initiative. While I am a sportsman at heart, I could not help but ponder about the Olympics and how far it has moved from its original purpose. Now it is positioned as an "economic development" activity. I also think about the many people, some of them 'homeless' who might be "relocated" to make way for the Olympics.

Today, I had the opportunity to meet and listen to Cedric Jennings, whose final years in high school and the first two years in College form the basis of the biographical book 'A Hope in the Unseen' by Ron Suskind. He talked to the students of the First Year Seminar classes- the book being a required reading for students. I was quite surprised to see how much we had in common, despite growing up in different countries and cultures. The emphasis on hard work and growing from challenges resonated with me- I hope some students got it.

At the end of the day, a student came by to talk to me about a project, and during the course of conversation mentioned that his Fall internship/job might be cut because of the economic mess. The job loss situation is hitting many homes, and it is getting uglier. Which is why everyone should be flabbergasted and mad at the Big Three auto CEOs who flew private jets to DC to ask Congress for taxpayer money.

No Answers to Common Sense Questions

So many questions...

• If Mr. Paulson's TARP (Troubled Asset Relief Program, aka the Bailout) to give money to banks in exchange for some form of equity is such a great idea, with taxpayers reaping rich rewards in equity appreciation, how come smart investors like Bill Gates and others aren't rushing to buy up bank shares? We did not hear Bill Gates saying that he would be giving a few billion dollars to a bank.
• Nardelli says Chrysler needs money to avoid bankruptcy. Why should the government bail out the poor decision of Cerberus? Mr. Nardelli, how about coughing up all the dough you took from the companies you ran (to the ground) before asking for money?
• GM's Wagoner was also asking for a bail-out. If you cannot get some long-term product development in place over decades, why would a short term financing of $25 billion help? Your products are lousy, and any discerning customer would find and buy better alternatives.
  

The auto story is one of products and the product-mix. The Big Three made enormous short-term profits but never invested money in longer-term product development. It simply is incredible that these shameless CEOs are asking tax payers for money.

Hope may not "Spring" eternal for students

I am hearing anecdotal reports that some students in Colleges might not come back in Spring because of their families' financial situations.
This might compound the problem experienced by Colleges which have seen their endowments shrink.

Studying abroad....

NYT has an interesting article titled "Study Abroad Flourishes, With China a Hot Spot." According to this story, "record numbers of American students are studying abroad, with especially strong growth in educational exchanges with China, the annual report by the Institute on International Education found. The number of Americans studying in China increased by 25 percent, and the number of Chinese students studying at American universities increased by 20 percent last year, according to the report, “Open Doors 2008.” “Interest in China is growing dramatically, and I think we’ll see even sharper increases in next year’s report,” said Allan E. Goodman, president of the institute. “People used to go to China to study the history and language, and many still do, but with China looming so large in all our futures, there’s been a real shift, and more students go for an understanding of what’s happening economically and politically.”"

Medical patients in the USA are increasingly purchasing drugs from Canada, Mexico, Ireland and other places to save money. They are also traveling to other countries, especially in Asia or in Latin or South America, for medical procedures. One of my friends recently went to India for a hip resurfacing procedure, because the doctors there were more experienced in the procedure and it was cheaper. Similar cost/benefit analysis has to come to higher education. There are excellent schools in other countries where students can get a rigorous education for a fraction of the tuition dollars spent in the United States. Parents and students should research and take advantage of this 'GO Abroad, Learn and Save (GOALS).'

One up on CEOs- GEOs or Greedy Education Officials

Interesting stories abound...
Goldman Sachs, in a "credit worthy" statement announced today that "the top executives at Goldman Sachs Group Inc. have decided to forgo their 2008 bonuses." Let' see- "The company’s chief executive, Lloyd C. Blankfein, received a salary and bonus package last year worth $68.5 million. Its two co-presidents, Gary D. Cohn and Jon Winkelried, were paid about $67.5 million each last year" (NYT). In September, Goldman Sachs became a bank holding company, and is getting bail-out money under TARP or some other scheme. UBS also followed suit. These Crooked Executive Officers need to be commended for their extraordinary acts of generosity and for their display of exemplary ethical behavior...

Joining this group is Mark Cuban, who is now charged by the SEC with Insider Trading of Mamma.com stock.

Not to be left behind, Presidents of Colleges and Universities also got top billing in the news today. All major newspapers, including the NYT and the WSJ, reported on an annual survey of College Presidents' pay, conducted by The Chronicle of Higher Education. According to the NYT, 'Median pay and benefits for presidents of public institutions rose 7.6 percent in 2007-8, to $427,400, The Chronicle said. Over a five-year period, the public universities’ median compensation rose 36 percent, compared with 19 percent at private institutions."
There is a nice graphic in the WSJ..


As I live in Illinois, I pay particular attention to local schools. The Chicago Tribune has an educational piece on this story. In Illinois, three private college presidents crossed the half-million dollar threshold for total compensation, which includes salary and such benefits as housing and car allowances, retirement pay and various kinds of deferred compensation. Besides Bienen, they were the University of Chicago's Robert Zimmer and Columbia College Chicago's Warrick Carter, according to the survey study.

Last week, our College's CFO was making a presentation on our budget when a faculty member asked her if she knew what the interest rates were on student loans. She apparently did not know the data but volunteered to find out. I did not tell her that a student of mine had come to see me the other day and in the course of the conversation, had informed me that her rate went up from 8% last year to 10% this year.
It is rather amazing that College and University Presidents, who are expected to set a stellar example in ethical and modest behavior, are acting just like the Corporate CEOs. Has any College President considered how much he/she is making relative to faculty and staff? Can these people justify making more than the President of the United States? Should these people make obscene amounts of money when students are struggling with aid? Moral of a Good Education- become a GEO.

To Have or To Have Not

There were some interesting articles in the papers today, getting at the picture of life from different directions. In the piece "Downturn Drags More Consumers Into Bankruptcy" authors Tara Siegel Bernard and Jenny Anderson write that "The economy’s deep troubles are pushing a growing number of already struggling consumers into bankruptcy, often with far more debt than those who filed in previous downturns. Plummeting home values, dwindling incomes and the near disappearance of credit have proved a potent mixture. While all the usual reasons that distressed borrowers seek bankruptcy — job loss, medical bills, divorce — play significant roles, new economic forces are changing the calculus of who can ride out the tough times and who cannot. " There is also an interesting graphic..


The Washington Post had a "credit worthy" article titled "Less Power to Purchase- Consumers' Credit Card Limits Slashed as Companies Try to Reduce Risk." Author Nancy Trejos writes that "Lenders are taking a wide range of steps to mitigate their risk as unemployment rates tick up and the number of delinquent borrowers grows. Besides cutting credit limits, card companies are raising rates and fees, and suspending offers such as zero percent balance transfers. They are also making rewards programs less rewarding and shutting down inactive accounts, industry analysts and watchdogs said. The retrenchment, which follows years of lavishing Americans with offers and ever-increasing limits, is squeezing consumers at a time when they have already lost other avenues for borrowing, such as home equity lines of credit. " She goes on to add that "...Lenders are now increasingly considering factors beyond late or missed payments. Some are looking at geography and shopping behavior as well. If you live in an area with a high foreclosure rate or shop at stores that risky borrowers frequent, don't be surprised if your line is reduced or your rate goes up."Among other factors, we do look at mortgage information and geography where there has been a greater deterioration in home prices. Those are some other factors, but again, we're looking at the entire credit profile," Lisa Gonzales, manager of public affairs for American Express, said of credit line reductions." We have taken actions such as lowering credit limits, adjusting rates, tightening credit standards and closing inactive accounts, particularly in certain geographies and where we can use mortgage data to enhance our decision-making capabilities," said Jeanette Volpi, vice president of public affairs for Citi. Reducing credit lines, in particular, has wreaked havoc on many consumers by affecting their debt utilization ratio, which is the percentage of available credit they are using. A high debt utilization can lower a credit score, which then makes it tougher to get credit or at least get credit under favorable terms."

These pieces reflect the problems faced by many in the middle class who 'credit'ably tried to live the high-class lifestyle by bingeing on debt. Now, their lifestyles will be significantly downsized, with lingering effects for their children. A lowering of the "conspicuous" style of life is to be expected and should be healthy.
***
On the other side of the card, NYT had an article titled "In Hard Times, No More Fancy Pants." that provided much food for thought. Here are some extracts- “There’s a shift to get away from glitz,” Ms. Kaufman said. “I’m almost starting to feel that luxury is a dirty word.” It is no secret that consumers are cutting back, anxious about jobs, plummeting home values and shrinking retirement savings. But that belt-tightening seems to have also prompted a reconsideration of what is acceptable consumerism even for those relatively unaffected by the economic cataclysm. When just about everyone is making do with less, sometimes much less, those $2,000 logo-laden handbags and Aspen vacations can seem in poor taste. “Luxe” is starting to look as out of fashion as square-toed shoes. As sales at high-end stores like Neiman Marcus plunged by nearly 30 percent in October, compared with a year earlier, Costco sales slipped just 1 percent and Wal-Mart reported gains. Henri Barguirdjian, the president of Graff, the diamond merchant, said on CNBC last week that the market for pieces from $20,000 to $100,000 had grown softer. Marine Products Corp., an Atlanta-based maker of yachts and pleasure boats, saw net sales decrease by nearly 40 percent in the quarter ending in September compared with a year earlier. “The era of conspicuous consumption, at least for the foreseeable future, has come to a close,” said Paco Underhill, the author of “Why We Buy,” which explores the science of retail. “Consumption will still happen. It’s just not going to be as public.” He cited a story from an Audi dealer: a buyer of an S4 high-performance sedan requested the nameplate be removed, “so only the person who really knew what they were looking at,” he said, “would know what it is.” Today, bejeweled fashionistas are pegged as tone-deaf Marie Antoinettes. “It’s not good taste in our business to walk into a party loaded with the biggest diamonds you can find,” said Bud Konheim, the chief executive of Nicole Miller. “You don’t brag about paying $10,000 for a dress for a party. The feeling now is, so what are you telling us? You’re either a sucker or showing off when people have lost jobs.” Conspicuous consumption has gone out of style before, in the recession that followed the 1980s stock market boom; and briefly after Sept. 11, 2001, until spending was recast as patriotic. But for a precedent for such a complete about-face in people’s attitudes toward luxury, you would have to look to the Great Depression... The economic collapse was also seen as a chance, after the 1920s bacchanalia, for moral cleansing. The industrialist Andrew W. Mellon said it would “purge the rottenness out of the system. People will work harder, live a more moral life.” Mr. Konheim of Nicole Miller, who was born in 1935, said he grew up in a mansion on Long Island with servants, but even for his family, waste was bad form. “We had three cars, and they were all Plymouths,” he said. “When the soap got down to slivers, what you did was squeeze soap together to make a soap bar — you didn’t throw it out.” Today, such thriftiness might make a comeback, said Alexandra Lebenthal, president of the wealth management firm Lebenthal and a contributing editor for the Web site New York Social Diary. It has become fashionable, she said, for socialites to talk enthusiastically about sample sales, eBay bargains and postponements at the hair salon in the interests of thrift. “It’s now chic to cut back,” she said. “If you ask people if they are going away for the holidays, they say, ‘No, we’re just spending a very quiet holiday with family’ — instead of ‘We’re going to Anguilla for Thanksgiving.’ ” Harry Slatkin, the founder of Slatkin & Co., a home fragrances company, said he and his wife, Laura, recently canceled a 50th birthday party for her at the Pool Room at the Four Seasons. Instead, they plan to have a party at home, with defrosted White Castle cheeseburgers served on silver trays. “It’s not time to have splashy birthday parties,” Mr. Slatkin said. “It’s a time to stay home, spend time with friends and connect.” Harrison Group, a market research firm in Waterbury, Conn., recently did a survey of attitudes toward wealth among people with household discretionary incomes above $100,000, in partnership with American Express Publishing. While 83 percent of respondents said they were in “good shape to endure this economic climate,” those who agreed that “a few luxuries are important in tough times” slipped to 50 percent, from 61 percent, from June to September. “The definition of living well is changing,” said Jim Taylor, a Harrison vice chairman. “There is a desire to not stand out. If you’re laying people off, you don’t want to buy a Ferrari.” Julien Tornare, the United States president of the Swiss luxury watchmaker Vacheron Constantin, predicted that his industry would move toward a period of “subtle luxury.” “I think people are going to go with more conservative, not ostentatious — something more discreet that only the connoisseur would know and appreciate, not the bling bling,” he said. The rich were not the only ones consuming conspicuously in recent years, said Marshal Cohen, chief industry analyst for NPD Group. The middle class, bingeing on cheap credit, also treated itself. Sub-Zero refrigerators, $300 jeans and Cadillac Escalades seemed within reach, even in average homes. “Those consumers were beneficiaries of false wealth, and they were living, literally, like millionaires,” Mr. Cohen said. Now as the middle class goes back to living like the middle class, Mr. Cohen said, the culture itself might feel more modest. Consumers may put a premium on comfort over flash....While fashion is always headed in three directions, consumers are turning away from disposable style — the overdesigned “it” handbag, for example — toward high-quality pieces that will endure over multiple seasons, said David Wolfe, creative director of the Doneger Group, which forecasts fashion and retail trends. The British company Mulberry has seen a shift toward its unadorned handbags, said Sarah Geary, its marketing director. Until a few months ago, consumer tastes were “focused on extravagance, irrespective of price,” she said in an e-mail message, but “in the coming months, the mood will be against that ‘blind consumption.’ ” Any new era of no-frills consumption, however, might last only as long as it takes for the Dow to recover, which could take months, years or decades. But Mr. Konheim recalled that after the Depression ended, conspicuous consumption was still vaguely sinful. When he was in high school in 1949, for instance, a girl at his school received a mink coat for her Sweet 16 party. “The whole town was in shock,” he said. “It was just a different atmosphere in the entire country.”

While the shrinking middle class is resizing its expectations, the well-to-do are, directionally, moving towards a less 'visibly conspicuous' lifestyle. While this does not necessarily equate to a lower standard of living, it does contribute towards that state.

What havoc does credit wreak....

Losing House, Declaring Bankruptcy, Watching TV

One sad story in NYT.."Downturn Drags More Consumers Into Bankruptcy" By Tara Siegel Bernard and Jenny Anderson. According to this article, "The economy’s deep troubles are pushing a growing number of already struggling consumers into bankruptcy, often with far more debt than those who filed in previous downturns. Plummeting home values, dwindling incomes and the near disappearance of credit have proved a potent mixture. While all the usual reasons that distressed borrowers seek bankruptcy — job loss, medical bills, divorce — play significant roles, new economic forces are changing the calculus of who can ride out the tough times and who cannot. The number of personal bankruptcy filings jumped nearly 8 percent in October from September, after marching steadily upward for the last two years, said Mike Bickford, president of Automated Access to Court Electronic Records, a bankruptcy data and management company. Filings totaled 108,595, surpassing 100,000 for the first time since a law that made it more difficult — and often twice as expensive — to file for bankruptcy took effect in 2005. That translated to an average of 4,936 bankruptcies filed each business day last month, up nearly 34 percent from October 2007."
Unfortunately, I have been predicting this, as the wide public has been living it up on credit while income from productive work has been stagnant or falling.

An interesting story to go along with this depressing bankruptcy filing news.
Jeanna Bryner, Senior Writer at LiveScience.com writes in an article titled"Unhappy People Watch Lots More TV" that "Unhappy people glue themselves to the television 30 percent more than happy people.
The finding, announced on Thursday, comes from a survey of nearly 30,000 American adults conducted between 1975 and 2006 as part of the General Social Survey. While happy people reported watching an average of 19 hours of television per week, unhappy people reported 25 hours a week. The results held even after taking into account education, income, age and marital status. In addition, happy individuals were more socially active, attended more religious services, voted more and read a newspaper more often than their less-chipper counterparts.
The researchers are not sure, though, whether unhappiness leads to more television-watching or more viewing leads to unhappiness."

De-Greed without an Education

I often use Bernie Ebbers, the infamous former CEO of bankrupt WorldCom, as an example when discussing unethical leadership. "At his corporate fraud trial, Ebbers said on the stand that he was unschooled in accounting and finance and that he left money decisions to his finance chief, Scott Sullivan. Ebbers was accused of orchestrating an $11 billion fraud which led to the largest bankruptcy in US history. "I know what I don't know," said Ebbers, "I don't, to this day, know technology. I don't know finance and accounting." Ebbers' testimony focused on his poor grades in school and his lack of knowledge about matters of finance and bookkeeping."
I tell students that I am thankful that Mr. Ebbers was found guilty on ALL counts. If he was declared not guilty, I would have to advise students to avoid learning anything, because that would be the best way to make a lot of money, and would offer the best defense against prosecution.

The WSJ today ran a story titled "Inflated Credentials Surface in Executive Suite" in which it stated that "Inflated academic credentials in the nation's executive suites may be more common than generally thought. A survey of 358 senior executives and directors at 53 publicly traded companies has turned up at least seven instances of claims that individuals had academic degrees they don't have."

After reading this article, I am not sure what advice to give students- to cheat, because it really pays, or to consider every action as a reflection on one's character.
****
For the interested, I have picked some juicy extracts from the article. "Among the executives whose credentials don't check out: Dennis Workman, chief technical officer at Trimble Navigation Ltd., a big maker of global-positioning-system devices; and James DeHoniesto, until Wednesday the chief information officer at Cabot Microelectronics Corp., a supplier of chemicals and pads used to polish microchips. Misstatements have cost top corporate officials or directors their jobs in the past few years at companies including retailer RadioShack Corp., vitamin maker Herbalife Ltd. and Usana Health Sciences Inc.
One of the discrepancies involves Mr. Workman, Trimble's chief technical officer. According to his biography in the Sunnyvale, Calif., company's annual report, Mr. Workman holds a master's degree in electrical engineering from the Massachusetts Institute of Technology. M.I.T. says Mr. Workman attended the school, studying physics for two semesters, but never earned a degree.

A corporate biography claimed Mr. DeHoniesto, the Cabot Microelectronics chief information officer, had a bachelor's degree in computer science from the University of Pittsburgh. Although he did attend Pitt's school of engineering in the 1980s, the senior manager didn't earn a degree, the school says. After Cabot received inquiries from the Journal about the matter Wednesday, Mr. DeHoniesto announced his resignation from the Aurora, Ill., company. He couldn't be reached for comment.

A biography of Sam Box, until recently the president of Tetra Tech Inc., appears repeatedly in the company's SEC filings identifying him as the holder of a bachelor's degree in civil engineering from the University of California. After receiving inquiries from the Journal last month prompted by Mr. Minkow's work, the Pasadena, Calif. environmental-engineering company said Mr. Box "admitted that he does not have a college degree," and that it would demote him to vice president. A spokesman for Tetra Tech, Michael Bieber, says Mr. Box came to Tetra Tech after it acquired his past employer, and Mr. Box's academic credentials weren't verified at the time.

Maurice Schweitzer, who studies business ethics at the University of Pennsylvania's Wharton School, urges companies to take a hard line on misrepresented academic credentials "If you say, 'Look, the CEO has been doing a great job, we otherwise have no complaints about this person, so we're going to let it go,' my concern is that you're sending a message throughout the organization that you don't want to be sending," he says. "I'm very concerned that if people believe you can lie and get away with it, then down the line people will start cheating on their expense reports, they'll start misrepresenting their billable hours, they'll start misusing their corporate funds," Mr. Schweitzer adds. Further down the corporate pecking order, inflated credentials are fairly common, according to Jenifer DeLoach, who supervises background checks for corporate clients at Kroll Inc., the investigative arm of Marsh & McLennan Cos. Kroll issues an annual report of its "hit ratio" that says about 20% of job seekers and rank-and-file employees undergoing background checks by their companies are found to have inflated their educational credentials.

Others with degree discrepancies discovered by Mr. Minkow in SEC filings and verified by the Journal with the applicable schools include: Robert Lazarowitz, a director of Knight Capital Group Inc. The New Jersey brokerage firm had said Mr. Lazarowitz earned a bachelor's degree in accounting from the University of South Florida. The school says Mr. Lazarowitz attended USF for only two semesters -- in 1975 and 1976 -- and never earned a degree. In a statement, Mr. Lazarowitz said, "I regret and take full responsibility for this mistake." Knight Capital says it will take "appropriate steps to update our corporate materials." Owen Kratz, the chief executive of Texas-based Helix Energy Solutions Group Inc. A corporate biography of Mr. Kratz claims he has a bachelor's degree in biology and chemistry from the State University of New York at Stony Brook. Not so, says Stony Brook's registrar's office. Mr. Kratz does have a biology degree from the College at Brockport, a less-prestigious SUNY campus where Mr. Kratz transferred in 1974, according to that school's registrar. A Helix Energy spokeswoman, Sheralyn Miller, acknowledges the mistake, and calls it "an internal error." She says Mr. Kratz had never claimed a Stony Brook degree, but "our proxy is off a little bit." Ms. Miller says the company will revise its filings. [CQ]Harold[/CQ] Rafuse, a director of Life Partners Holdings Inc., a Waco, Texas, insurance broker. Life Partners had said Mr. Rafuse held a bachelor's degree in chemical technology from Temple University. But he earned only an associate's degree, not a bachelor's, according to Temple officials. Life Partners' general counsel, Scott Peden, says the company will correct its disclosure in its next proxy. He says Mr. Rafuse had received what he thought was the "functional equivalent of a bachelor's" degree. The discrepancy isn't "material," Mr. Peden says. Kenneth Keiser, the president and chief operating officer of PepsiAmericas Inc., one of the country's biggest Pepsi bottlers. Mr. Keiser has been identified for three years in annual reports and proxy statements filed with the SEC by shipping concern C.H. Robinson Worldwide Inc., where he is a director, as having a bachelor of arts degree from Michigan State University. The university says that isn't so. It says Mr. Keiser attended from 1973 to 1976, but never graduated. A PepsiAmericas spokeswoman, Mary Viola, says the company was aware Mr. Keiser stopped attending college "10 or 20 hours short of a degree." She says C.H. Robinson had mistakenly imputed a bachelor's degree to Mr. Keiser in its past several proxy statements. "I'm sure [Mr. Keiser] does read their proxy, but he doesn't read his own bio," Ms. Viola says. "It's unfortunate that a communication error of another company is drawing attention to this for Ken." Angie Freeman, a spokeswoman for C.H. Robinson, says her company was responsible for the error and had "mistakenly assumed that he earned a degree." But Ms. Freeman says she believes Mr. Keiser signed off on his own mistaken biography. "The company did periodically provide the materials for him to review," she says, in the process of preparing its 2006, 2007 and 2008 proxy statements -- all of which included the erroneous degree."

The WSJ had another article today on this topic, "Resume Trouble." Here is that article.

Resume Trouble A new survey of 358 officers at 53 publicly-traded companies has turned up at least 10 instances of senior executives or directors who claimed academic degrees they didn't earn. See other infamous instances of resume padding in business, politics and academia.ArticleComments more in Careers Main » EmailPrinter Friendly Share: Yahoo Buzz facebookMySpaceLinkedInDiggdel.icio.usNewsVineStumbleUponMixx Text Size IranOn. Nov. 4, Iran's parliament impeached and dismissed interior minister Ali Kordan, a staunch ally of President Mahmoud Ahmadinejad, for faking his higher-education degrees. Mr. Kordan's honorary doctorate in law from Oxford University came under investigation when an Iranian Web site posted a copy of the diploma that showed glaring spelling mistakes. Oxford University issued a statement that the degree was fake. An investigation by Iran's higher-education committee further revealed that Mr. Kordan's other degrees -- a bachelor's and a master's from Azad Islamic University in Tehran -- were forged as well.
• Iran Lawmakers Oust Ally of Ahmadinejad
11/5/08 * * *HerbaLifeGregory Probert, the president and chief operating officer of Herbalife Ltd., resigned in April 2008 after he was caught embellishing his academic credentials by fraud investigator Barry Minkow. Herbalife, a Los Angeles marketer of weight-loss products, had said Mr. Probert received a master's degree in business administration from California State University, Los Angeles. It mentioned the degree in at least 19 filings with the Securities and Exchange Commission. But Mr. Probert never finished Cal State's M.B.A. program, where he took classes in the early 1980s, the university said. In response, Mr. Probert said he nearly completed an M.B.A. at Cal State but did not take action to correct Herbalife's biography of him.
• Herbalife President Is Scrutinized
4/25/08 * * *Massachusetts Institute of TechnologyIn 2007, the Massachusetts Institute of Technology dismissed its longtime dean of admissions, Marilee Jones, after the university received an anonymous tip that she had claimed fake academic degrees. She attended college for one year, as a part-time student at the Rensselaer Polytechnic Institute in 1974, but never received the bachelor's or master's degrees that she claimed from RPI. Nor did she receive a degree she claimed from Albany Medical College, the university found. In a statement released by the university, Ms. Jones said she first fudged her résumé in 1979 when she was hired in a junior position in the MIT admissions office. When she was promoted to the deanship in 1997, she "did not have the courage to correct my résumé," she wrote.
• MIT Admissions Dean Lied on Résumé in 1979, Quits
4/27/07 * * *R.H. DonnelleyIn the fall of 2006, telephone-directory publisher R.H. Donnelley Corp. said that its chairman and chief executive never graduated from the Minnesota university he attended. David Swanson attended St. Cloud State University in Minnesota from 1973 to 1976 but didn't earn a degree. R.H. Donnelley had twice issued news releases stating that he had. One was issued to announce Mr. Swanson's appointment as chief executive in 2002; the other announced a promotion in 1999. The company said the detail had never appeared in any document filed with the SEC or the New York Stock Exchange. It said Mr. Swanson didn't claim to be a graduate of St. Cloud State when he was hired 21 years ago. Mr. Swanson remains at the helm of R.H. Donnelly. • R.H. Donnelley Corrects Details On CEO's College Background
9/12/06 * * *RadioShackIn 2006, RadioShack Corp. Chief Executive David Edmondson resigned by "mutual agreement" after he admitted inflating his educational background. Mr. Edmondson acknowledged misstating his educational credentials, saying he believed he received a ThG diploma from Pacific Coast Baptist College -- typically a certificate with fewer requirements than a bachelor's degree -- and not a bachelor of science degree as he previously claimed. But the CEO also acknowledged he couldn't document the ThG diploma.
• RadioShack CEO Agrees to Resign
2/21/06 * * *Smith & WessonJames Minder resigned shortly after being named chairman of gun maker Smith & Wesson Holding Corp. in 2004 when it was learned that he had spent time in prison in the 1950s and '60s for an armed-robbery spree and an attempted prison escape. Mr. Minder confessed his past to directors after getting a call from a reporter. He later spent more than two decades setting up programs and group homes for delinquent, neglected and developmentally disabled children and young adults.
• How Troubled Past Finally Caught Up With James Minder
3/8/04 * * *Bausch & LombIn 2002, eye-care company Bausch & Lomb rescinded a bonus for CEO Ronald Zarrella after learning his biography incorrectly claimed he had an M.B.A. He offered to resign; the board didn't accept his resignation and he remains CEO.
• Bausch & Lomb Backs CEO Despite False M.B.A. Claim
10/21/02 * * *U.S. Olympic CommitteeSandra Baldwin resigned in 2002 as president of the U.S. Olympic Committee after admitting she lied about earning an undergraduate degree from the University of Colorado in 1962 and a doctorate from Arizona State in 1967. She actually attended Colorado in 1958-1959 without graduating and earned a bachelor's degree from Arizona State in 1962. She said she completed the course work for a doctorate but didn't finish her dissertation. * * *Veritas SoftwareIn 2002, the chief financial officer of Veritas Software, Kenneth E. Lonchar, resigned after directors learned he had lied about having an M.B.A. from Stanford University.
• Veritas Finance Head Resigns Amid Resume Discrepancies
10/4/02 * * *A.T. KearneyGene Shen resigned in 2002 as CEO of Chicago-based A.T. Kearney Executive Search after alleged exaggerations of his education and work history surfaced. * * *University of Notre DameIn 2001, newly hired Notre Dame football coach George O'Leary was forced to resign after five days. Mr. O'Leary claimed to have a master's degree in education and to have played college football for three years, but checks into his background showed it wasn't true. Mr. O'Leary, who was mockingly called George O'Really, now coaches at the University of Central Florida. * * *Mount Holyoke CollegeIn 2001, Mount Holyoke College suspended Pulitzer Prize-winning historian Joseph Ellis for a year without pay for falsely telling students that he had fought in the Vietnam War.
• Opinion: A Bright Shining Lie
6/22/01 * * *Maori TVIn New Zealand, Maori TV CEO John Davy was fired and then jailed for three months in 2001 for lying on his application for the job. * * *Sunbeam"Chainsaw" Al Dunlap, ousted by Sunbeam in 1998 amid allegations of accounting irregularities, was later discovered to have been terminated by Max Phillips & Son after seven weeks in 1973 and by Nitec Paper Corp. in 1976 after two years as president, according to his lawyer. The two major search firms checking his employment history never uncovered those dismissals.
• Sunbeam Gives Dunlap the Ax
6/15/98

A 'Fiction'al tale

Today was an interesting day. After grading some homework assignments and attending a faculty meeting, I was driving back to my home and listening to the radio. There was an interview with a NYT reporter about a new book that has the front pages of all the NYT newspapers published thus far. This book weighs more than 8 lbs. The reporter described his favorite pieces, one involving the Gettysburg Address of President Lincoln, and the other a piece on the inventor of electricity.
Another story on the radio involved an interview with a 'music' person who ranked all the songs in Bond movies, on the heels of the new Bond movie "Quantum of Solace."
Late in the night, I was talking to my brother and our discussion wandered to reading and fiction. As he reminded me, I used to be an avid reader of fiction in my school and college days, devouring works of authors like James Clavell, Doyle, Wodehouse, Ayn Rand, Ludlum, Wallace, McLean, and many others. Unfortunately I have not read much fiction in recent years. My brother then read me some wonderful pieces by A.G. Gardiner. I then talked about Sir Walter Scott, whose novel Ivanhoe was one of our readings in school. I had then gone on to read Kenilworth and Talisman. I happened to remember R.W. Emerson and the poem The Mountain and the Squirrel, which my brother then went on to recite to me. The human mind is such an incongruous object with beauty, charm, and performance. I wish I had read more works of Christie, Austen, and others. We talked about the many wonderful Indian writers whose works we both wish we had read more- Tagore, Sarojini Naidu, and others. We talked about the wonderful songs of Manna Dey in Bengali, and ended with my brother reading another piece by Gardiner.
A joyous journey through the works of great writers. My brother himself is an amazing writer and story-teller, with a great gift for narrating complex human stories in a charming yet poignant manner.

Unfortunately the world of reality pulls us down...

'Atom'ic state of affairs

Intel recently came out with the 'Atom' chip- a low-power processor designed for mobile devices including laptops.
Intel announced yesterday that its sales and margins for the next quarter will be significantly lower than original forecasts. CEO Paul Otellini already expects this slump to be the worst of his lifetime.

DHL US cuts nearly 13,000 jobs, Best Buy is not buying into a "Merry Christmas" season, and according to the WSJ, Even Debt Collectors Have Hit Hard Times.

As I have stated in the past, it is cash flow from productive work that will form the basis for a sustainable foundation. Folks will have to adjust to a much lower standard of living, as asset appreciation will not be a major source of funds in the near future.

Education

The Indian Institutes of Technology, a.k.a. the IITs, are well-known for their entrance exams, the famous JEE, the Joint Entrance Exam. I ranked #524 (I think) back in 1978, when the questions were essay-type. I remember having to solve detailed problems in math. physics and chemistry. Now, even the IITs have gone to a multiple-choice exam format.

Today, the WSJ has an interesting article titled "India's Colleges Battle a Thicket of Red Tape" in which describes the labyrinth of Indian regulations. What the article does not describe is the scale of corruption in Indian Education. One of my friends was closely involved with the JEE and also the oversight of other Indian engineering schools and expressed his great frustration at the sheer scale of corruption involved.

On a different note, WSJ had an interesting article on the South Korean Entrance Exam- On College-Entrance Exam Day, All of South Korea Is Put to the Test. This exam determines which university a student can get admitted to.
Video-clip from WSJ.

These stories come on the heels of my recent harrowing experience- grading project reports of my students.

What's wrong with good words like 'decline' and 'percent?'

A NYT article today read "Australians can avoid even a single quarter of negative growth during the current financial meltdown if they do not talk down the economy, the treasury chief said Wednesday."
What is negative growth? Why not just use the word 'decline?'

The term "basis points" is used commonly, as in "the interest rate is up 200 basis points." Why not say that the rate is up 2 %?

"All American" Socialism-Style Bail-Outs

The American International Group Story, reported in the NYT.
Extracts:
The American International Group said on Monday that it lost almost $25 billion in the third quarter and had secured a new $150 billion government assistance package intended to stem the bleeding from its complex financial contracts. Originally, the Federal Reserve rushed in with an $85 billion line of credit. When that proved inadequate, the Fed added a $38 billion supplementary lending facility, and A.I.G. recently qualified to sell $21 billion of commercial paper to the Fed.The new assistance package reduces the original $85 billion loan to about $60 billion, lowers the interest rate and gives A.I.G. five years, instead of two, to pay it off. The government will also use money from its Troubled Asset Relief Program to buy $40 billion of preferred shares in A.I.G. Another important feature will be government investments of about $50 billion to create special-purpose entities to relieve the company of its most tainted assets. About $30 billion of the government money will be used to buy complex debt securities that were insured by A.I.G. and about $20 billion more will be used to buy securities backed by home loans. A.I.G.’s counterparties — financial institutions in the United States and Europe — have not borne significant losses on the financial contracts that led A.I.G. to the brink, and the new program suggests they will not. “We’re funding somebody on the other side” of A.I.G.’s derivatives contracts, said Lynn E. Turner, a former chief accountant with the Securities and Exchange Commission who has been critical of the way the insurer’s crisis has been handled. Even though a large amount of public money is being extended, neither A.I.G. nor the federal government has been willing to provide the names of the company’s biggest counterparties, or their amount of exposure. “We’ve had way too many things here that nobody knows anything about,” said Mr. Turner, who is on the Treasury’s Advisory Committee on the Auditing Profession. “That’s why no one has faith in the capital markets.”

This hand-out is rushed out to the egregious AIG managers and shareholders while hardworking folks who acted "foolishly" and did not take out the 0% down no doc loans are now paying for their "sensibility."

American Express to Be Bank Holding Company (NYT)

Extracts:
American Express, the nation’s last big independent credit card company, said late Monday that it would transform into a bank holding company to strengthen its position in the market turmoil. Federal Reserve banking regulators said they approved its application because of the “unusual and exigent circumstances” roiling financial markets and the company’s interest in tapping up to $3.8 billion in government money. As a full-fledged bank, American Express would gain greater access to the Treasury Department’s bailout plan for banks, a move that might allow it to lend more freely and perhaps acquire a larger deposit-taking institution.

Everyone who is anyone is rushing to get the loot from Helicopter Ben and his piggy bank, the Fed.

Now, to the all-important jobs situation

Circuit City Short-Circuited:

Circuit City Stores Inc. filed for bankruptcy protection Monday. It said it cut 700 more jobs at its Richmond, Va., headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.

DHL grounded

Delivery company DHL, hit by heavy losses and fierce competition, is significantly reducing its air and ground operations in the U.S. and cutting 9,500 American jobs, leaving rivals like FedEx, UPS and the U.S. Postal Service to fight over the customers it will stop serving.

Nortel Hangs-up

Canadian telecommunications equipment maker Nortel Networks Corp. posted a third-quarter loss Monday, reversing a year-ago profit as the economic turmoil and a large goodwill impairment charge weighed on results.The struggling company also announced a new round of job cuts, saying it plans to eliminate about 1,300 positions starting this year and ending in 2009.

Carting Away Dangerous People

This evening I drove my sisters to a mall where they had to pick up some stuff. I had parked my car and was waiting inside when I saw an oversized woman pull a cart to her SUV which was parked next to my car. After unloading the cart, this woman, with the brain of a shriveled jellyfish, moved the cart and placed it right between her SUV and my car, and pulled away. A little wind or movement and the cart would hit my car or other vehicles parked nearby. This under-brained woman was too lazy to return the cart to the proper place.
Idiots like this should be made to do community service for very infraction.

Getting too warm for comfort....

Students in our first year seminar course "Local Choices, Global Effects" recently completed a project on Energy. Subsequently, in their reflections, most students mentioned that they had become much more aware of global warming and its consequences by doing this project. One more aware citizen is one step forward.

Research on Arctic and North Atlantic ecosystems shows the recent warming trend counts as the most dramatic climate change since the onset of human civilization 5,000 years ago, according to studies published Thursday.

WSJ, in an article titled "A New Dawn" reports that there is a growing consensus among climate scientists that we have less than eight years to start making a significant impact on CO2 and other greenhouse gas emissions, eight years to move from Berkeley's solipsism to Johnson's pragmatism. Thereafter, as tipping points are reached, as feedback loops strengthen, the emissions curve will rise too quickly for us to restrain it. In the words of John Schellnhuber, one of Europe's leading climate scientists and Chief Scientific Adviser to Angela Merkel, the German Chancellor, "what is required is an industrial revolution for sustainability, starting now."

To be effective, this is only possible at the level of international cooperation -- far more difficult to achieve than any technological breakthrough. There is a rendezvous next year in Copenhagen in late November which the entire world of climate expertise is preparing itself for and which is considered by many in the field to be our best and possibly last hope of addressing the problem before it runs away from us. It is the truly global successor to Kyoto, known in the trade as COP (Conference of Parties) 15. There is a case to be made that it will be one of the most important international meetings ever convened. If it does not result in practical, radical measures, the fight to control our future could well be lost. Every nation on the planet will be represented. The general feeling is that the conference cannot be allowed to fail. And it cannot succeed without the leadership of the United States. There are fears that Mr. Obama will move too cautiously on climate change for political reasons, and that would be a tragic error. As Mr. Schellnhuber says, "If he were prepared to come in person to Copenhagen and make a speech, a bold commitment, similar to what Reagan did in Reykjavik, he would become a hero of the planet, for good."

****

Jennifer Viegas reported in Discovery News on Oct. 31, 2008 -that if it seems like spiders, scorpions, ticks and mites have been around forever, it's because they nearly have, according to new genetic research that found these arachnids first emerged at least 400 to 450 million years ago. The study, published in the latest issue of Experimental and Applied Acarology, extends the known world presence of these creepy crawlies by over 200 million years. The oldest fossil spider is 125 to 135 million years old, while the oldest fossil scorpion is around 200 million years old. These invertebrates could even have emerged much earlier than this latest study determined. "A horseshoe crab dating to 475 million years ago provided one of our anchor dates, and this crab actually looked quite modern, as did a Devonian period (416 to 359 million years ago) mite that was one very modern-looking mite," co-author Marjorie Hoy told Discovery News. Hoy, a University of Florida entomologist, added, "I don't think the individuals just suddenly appeared on Earth, so it's likely these invertebrates are even older than we estimated."

Free, i.e. jobless, in the US of A

Non-farm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The nation's jobless rate surged to a 14-year high of 6.5 percent in October, as employers -- bracing for a deep recession --- chopped payrolls at an accelerating pace, the government reported Friday. According to the Tribune, the Labor Department jobs report is the latest in a recent series of dire indicators, and it "depicts an economy still in free-fall and without a safety net anywhere in sight," said economist Bernard Baumohl. President-elect Barack Obama, Baumohl added, "is inheriting the worst set of economic conditions since Franklin Roosevelt." That means the nation has now lost jobs for ten consecutive months,with a cumulative loss of 1.2 million jobs – and the pace is gathering momentum: half those losses came during the last three months. Some forecasters think the jobless rate will top 8.0 percent in the coming year.

Many writers including myself have written about the 'bogus' numbers reported by the government based on the 'birth-death' model. The real number of unemployed is perhaps significantly higher.

Just as important as the number of unemployed is the quality of jobs available, and the quality of jobs of those who are employed. While reliable data is hard to come by, the number of highly educated and qualified folks (in my own circle) working in mundane, low skill jobs is just staggering.

I sincerely hope that BOB, i.e. Barack OBama, has more up his sleeve than the silly "fiscal stimulus checks" he plans to give the public. If he has to spend money, spend it on public works including infrastructure and education.
Bob, I had a student in my office the other day. A bright young woman, interested in political science and economics, she has a scholarship but still has to borrow substantial amounts to cover tuition and other needs. She told me that the interest rate on her student loans went up from 8% last year to 10% this year. This is simply extortion. And Bush and you, Bob, are giving more money to the banks who are just fleecing the young. As a consequence, this young lady and others like her have to work many hours, often more than 20, in a week to help pay the bills- hours that should have been spent learning. Throwing more money at the banks is not the solution, gearing up the automakers by giving them money is not the solution. Having students earn money by doing work related to learning- practical work, internships, etc., would be progressive and would pay higher dividends.

For the managers and shareholders of finance firms and drug companies, the basic question is - How much profit would you like to extract from other people's misery?

Palinoscopy reveals....

More stuff on Sarah Palin's doings..

Some truth comes out, some of the time....

Reflections....and Oases

The day after...

Obama has run a smart campaign, focusing on the Iraq war during the primaries and shifting to the economy as the summer rolled on. Now, he has to be smart in selecting his team, and be tactical in dealing with the current crises.

While the Obaminauguration show goes on, the business of business also goes on.

Obama has emphasized fair and free trade, which is causing nervousness among many countries.

In an article titled "Obama Victory Provokes Trade Worries In Asia" Tina Wang writes that "Asian countries are bracing themselves for the impact on trade policy of Barack Obama's victory in the U.S. presidential election Tuesday. Obama's win could delay a major trade pact with South Korea and could intensify pressure on China on the related issues of its currency valuation and the U.S. trade deficit.In the weeks leading up to this election, Obama has voiced a tougher stance on trade negotiations with South Korea and China than has his Republican rival, John McCain. In particular, Obama has suggested he would push for a revision of the terms of a historic free trade agreement signed in 2007 by South Korea and the United States, after nearly a year of tough talks, and yet to be ratified by the two countries. The FTA would abolish most tariffs on goods traded between the two countries and would add tens of billions of dollars to bilateral trade.

"Koreans are all worrying about the FTA," said Dong Hyu Yang, an economist at Seoul National University. "Mr. Obama would like to renegotiate the agreement, but I wonder if this is possible from this side." The South Korean government may not be ready to renegotiate, but "it all depends on how tough Mr. Obama will get about this issue," he added.

......One major question will be how President-elect Obama responds to a protectionist-leaning Congress, which Tuesday turned over more Republican seats for Democratic gains. Some Senate Democrats have been vocal critics of China's currency controls and called for stepping up duties on Chinese imports.

Obama said in September that he was concerned about Chinese textile imports and would consider levying restrictions on Chinese goods, as well as promising to exert greater pressure on Beijing to allow the yuan more leeway to appreciate in order to narrow the $260 billion U.S. trade deficit with China. A China Daily editorial Wednesday analyzing the U.S. presidential election outcome responded to some of the concerns of U.S. trade critics: "As a growing market with 1.3 billion people, China is going to consume more goods made in America, creating job opportunities for the US."

According to Bloomberg, Luxury retailers may suffer the industry's biggest reversal of fortune during the holidays as the global financial crisis dents the wealth of the richest Americans.

The Institute for Supply Management's non-manufacturing index, which covers almost 90 percent of the economy, fell to 44.4, below economists' forecasts and the worst result since records began in 1997. A private survey indicated that companies axed 157,000 workers last month.

Ohhhhh! Bama!

These are days you’ll remember
Never before and never since, I promise
Will the whole world be warm as this
And as you feel it,
You’ll know it’s true
That you are blessed and lucky
..................................10000 Maniacs

Obama has been declared the next President.
Reason for Optimism!

Naperville in Red DuPage....Turning Blue, Slowly

Today was another gorgeous day in Chicago, with temperatures in the seventies. I went out to run this morning, and for the first time ever, took my cell phone with me on my run. This was not because I wanted to be 'connected' while running, but I wanted to take some pictures of the election-related signs dotting the landscape.
I live in a modest single family house in a somewhat upscale part of Naperville, a city that is often listed in the top 10 cities to live in the US of A. This is in DuPage county, which has a red tradition of voting Republican, no matter how unqualified the Republican candidates are.

While I did see a large number of McPalin signs, there were about 2 Obama/Biden signs for every 3 McPalin ones. This is quite decent for this place.
Pictures taken on my run...






The sheer 'excess' exemplified by this newly constructed house nearby...




Even in upscale Naperville, folks are having problems. One of the churches is offering...



A picture of my running path..